EUROPE is in ‘mild recession’ while the US and Britain could go down the same route, according to a new report from the Organisation for Economic Co-operation and Development.

The eurozone will grow by just 0.2pc in 2012 compared with a much more positive forecast given in May of 2pc.

The OECD also cut its global forecast to 3.8pc in 2012 and 3.4pc in 2012.

"More than usual, world economic prospects depend on events," it warned in a statement.

Commenting on the US, it said that if congress can’t agree a deficit reduction plan, austerity is likely to trigger a recession in the US while if it does growth will reach 2pc next year, compared with an earlier forecast of 3.1pc.

Even economic powerhouse China hasn’t been spared – with growth expected to slow from 9.3pc to 8.5pc while world trade is also expected to slow down.